FASB published a summary of the Board's tentative decisions at the April 10, 2019 meeting, including decisions related to the Targeted Transition Relief under the credit losses standard.
The Board discussed the comments received on the proposed Accounting Standards Update, Targeted Transition Relief for Topic 326, Financial Instruments—Credit Losses. The Board affirmed its decisions to permit an entity to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments—Overall, for certain instruments within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost. An entity would be required to apply the election on an instrument-by-instrument basis for eligible instruments on adoption of Topic 326. Also affirmed was the decision to exclude debt securities classified as held-to-maturity from the scope of instruments eligible for the transition relief and the decision to not provide an option to discontinue fair value measurements for financial assets measured at fair value through net income and instead apply the measurement guidance in Subtopic 326-20. With regard to the transition, the Board decided the following:
- For an entity that has not yet adopted the amendments in Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, the entity should apply the effective date and transition method for the amendments in this Update using the same effective date and transition method of Update 2016-13.
- For an entity that has adopted the amendments in Update 2016-13, the entity should apply the amendments in this Update for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities should apply the amendments on a modified retrospective basis by means of a cumulative-effect adjustment to the opening retained earnings balance as of the beginning of the first reporting period in which Update 2016-13 was adopted. Early adoption will be permitted in any interim period within the fiscal years beginning after December 15, 2018, provided that an entity has adopted Update 2016-13.
The Board concluded that it has received sufficient information and analysis to make an informed decision and that the expected benefits of the amendments will justify the expected costs. Finally, the Board directed the staff to draft an Accounting Standards Update for vote by written ballot.
Keywords: Americas, US, Banking, Accounting, CECL, Credit Risk, IFRS 9, Credit Losses Standard, Financial Instruments, Topic 326, FASB
Previous ArticleIMF Publishes Global Financial Stability Report in April 2019
BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.
In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.